Daily Market Outlook, June 22, 2020 

<h2><span>Daily Market Outlook, June 22, 2020 </span></h2>
<p><span><strong>Market risk sentiment has started the new week subdued.</strong> This has provided little impetus to equities in the Far East, which remain broadly unchanged from Friday’s close. Overnight, South Korea trade data for the first 20 days of June showed the rate of contraction in both exports and imports continued to ease, providing some hope that global trade is on a gradual path to recovery. Domestically, media reports suggest that UK PM Johnson is set to announce a relaxation in social distancing rules on Tuesday. Meanwhile Chancellor Sunak is reportedly preparing a package of stimulus measures – including a temporary cut in VAT – in order to stimulate economic activity in the UK. </span></p>
<p><span><strong>Sentiment continues to be buffeted between signs of improving economic conditions, as lockdown restrictions ease, against concerns that covid-19 cases are rising again in some countries.</strong> The past week has seen reports of new coronavirus cases in Beijing and an acceleration of cases in a number of US states. However, confirmation from the Fed of its intention to buy corporate bonds and reports that US government is considering a $1trn infrastructure spending boost helped support US and global equities. Additionally, more timely economic data continue to point to economic conditions turning up. With restrictions continuing to be eased, June data will be watched for further signs of improvement. </span></p>
<p><span><strong>Ahead of the more-closely watched PMIs for June tomorrow</strong>, today’s CBI industrial survey will provide further evidence on whether the UK factory sector has improved this month. Close attention will be paid to orders data for an indication of the sustainability of any upturn. </span></p>
<p><span><strong>Later today, US existing home sales and the Chicago Fed national activity index reports are for May</strong>, but are still expected to show improvements given that some restrictions started to be eased from last month. Meanwhile, comments from a number of ECB speakers – De Guindos, Lane and Weidmann – at various events are not expected to be particularly market-moving, but are likely to reiterate a readiness to provide further support should the upturn prove flaccid.</span></p>
<p><span><strong>CFTC net non-commercial positioning data for the major currencies show that investors placed the largest weekly (net) bet against the greenback since midMarch with net USD shorts rising by USD7.3bn in the week to Tuesday to just over USD16bn across the key currencies that we track.</strong> This represents the largest net USD short in over two years as traders’ confidence in a continued decline in the dollar (or at least an end to its March-May dominance) increases; note that the data does not cover the greenback’s outperformance in the latter part of this week. • Positioning changes across the major currencies were fairly one-directional against the USD with only the CAD and the CHF seeing a minor decline in their net position versus the dollar at -USD32mn and -USD21mn, respectively. Net CAD shorts have been fairly stable for the last two months or so while net CHF longs have (momentarily, perhaps) stabilized after last week’s large retreat. </span></p>
<p><span><strong>Speculative accounts greatly expanded their EUR net longs in the past week</strong> with a USD2.9bn increase to accumulate their highest net bet against the USD since May 2018 at USD16.5bn, largely on the back of a 19k decline in short contracts against a 2.5k increase in longs. The common currency’s ~0.7% decline since Tuesday nevertheless suggests the EUR’s net long may have been pulled back. </span></p>
<p><span><strong>The AUD’s net short fell to its lowest point since May 2018</strong> as well with speculators reducing it by USD2.1bn to a ’mere’ USD450mn as investors took a more positive view on the risk environment—but ahead of increased concerns of rising cases in the West and South of the US. Net NZD positioning is only slightly negative at USD125mn following a net short reduction of USD608mn which like the EUR and AUD is the result of a large reduction in short contracts. </span></p>
<p><span><strong>Net JPY positioning turned even more positive with a net long increase</strong> of USD550mn that stands in conflict with the narrative of markets embracing risk. Since Tuesday, the JPY has led the G10 space versus the USD with a 0.9% gain.</span></p>
<h3><b>Today’s Options Expiries</b><span> for 10AM New York Cut (notable size in bold)</span></h3>
<ul>
<li><span>EURUSD: </span><b>1.0850-40 (2.15BLN), </b><span>1.1165 (432M)</span><b>, 1.1200-05 (1.9 BLN), </b><span>1.1235 (337M)</span><b>, 1.1245-50 (1.24BLN), </b><span>1.1300 (926M), 1.1350 (482M)</span></li>
<li><span>GBPUSD: 1.1920 (805M), 1.2600 (573M)</span></li>
<li><span>USDJPY:</span><b> 104.70 (1.3BLN)</b><span>, 107.36-39 (565M), 108.00 (360M)</span></li>
</ul>
<h3><span>Technical &amp; Trade Views</span></h3>
<p><b>EURUSD Bias: Bullish above 1.1170 Bearish below</b></p>
<p><span>From a technical and trading perspective, as symmetry swing support at 1.1170 supports there is a window for fresh demand to take prices higher again to retest cycle highs above 1.14 enroute to an ultimate retest of year to date highs at 1.15. However, it is noteworthy that the daily volume weighted average price has flipped bearish as such a failure to hold support at 1.1170/50 would open a deeper corrective phase to rest bids back to 1.10 </span></p>
<p><img class="aligncenter size-full wp-image-45677" src="http://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-22-08.19.46.png" alt="" width="2145" height="1236" srcset="https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-22-08.19.46.png 2145w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-22-08.19.46-300×173.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-22-08.19.46-1024×590.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-22-08.19.46-768×443.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-22-08.19.46-1536×885.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-22-08.19.46-2048×1180.png 2048w" sizes="(max-width: 2145px) 100vw, 2145px" /></p>
<p><b>GBPUSD Bias: Bullish above 1.24 Bearish below</b></p>
<p><span>GBPUSD From a technical and trading perspective, 1.2324 equality downside objective achieved, buyers have stepped in and as this level is defended look for a move to test descending trendline resistance at 1.25. Bearish reversal patterns in this area would set up a move to retests and ultimately erode support at 1.2320 opening a move to test 1.21. On the day only a close back through 1.2510 would suggest a more meaningful low is in place for another attempt to take out stops above 1.28</span></p>
<p><img class="aligncenter size-full wp-image-45678" src="http://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-22-08.20.02.png" alt="" width="2155" height="1238" srcset="https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-22-08.20.02.png 2155w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-22-08.20.02-300×172.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-22-08.20.02-1024×588.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-22-08.20.02-768×441.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-22-08.20.02-1536×882.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-22-08.20.02-2048×1177.png 2048w" sizes="(max-width: 2155px) 100vw, 2155px" /></p>
<p><b>USDJPY Bias: Bearish below 1.08 targeting 1.06</b></p>
<p><span>USDJPY From a technical and trading perspective, sharp rejection above 109.50 suggests a return to range trade and a retest of support back to 107 UPDATE target achieved as 108 caps upside attempts bears will play for a test of year to date lows to 106 </span></p>
<p><img class="aligncenter size-full wp-image-45679" src="http://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-22-08.20.16.png" alt="" width="2151" height="1234" srcset="https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-22-08.20.16.png 2151w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-22-08.20.16-300×172.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-22-08.20.16-1024×587.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-22-08.20.16-768×441.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-22-08.20.16-1536×881.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-22-08.20.16-2048×1175.png 2048w" sizes="(max-width: 2151px) 100vw, 2151px" /></p>
<p><b>AUDUSD Bias: Bearish below .6900 Bullish above)</b></p>
<p><span>AUDUSD From a technical and trading perspective, after the rejection from above the .7050 level and the subsequent failure to hold .6900 as support, anticipate a test of the corrective equality objective back to .6650. Only a close back through .6910 would reignite bullish spirits suggesting the current correction is complete opening another run to test offers and stops above .7050</span></p>
<p><img class="aligncenter size-full wp-image-45680" src="http://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-22-08.20.29.png" alt="" width="2154" height="1236" srcset="https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-22-08.20.29.png 2154w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-22-08.20.29-300×172.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-22-08.20.29-1024×588.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-22-08.20.29-768×441.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-22-08.20.29-1536×881.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-22-08.20.29-2048×1175.png 2048w" sizes="(max-width: 2154px) 100vw, 2154px" /></p>
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